US Department of Defense awards JEDI contract to Microsoft, snubbing Amazon’s AWS

Kip Kniskern

After years of deliberation, setbacks, and litigation, the US Department of Defense has announced that it has awarded Microsoft the highly prized “JEDI” (Joint Emterprise Defense Infrastructure) contract. The contract is set to cover 10 years, with an estimated $10 billion in spending. Amazon has been a clear leader throughout much of the process, although Microsoft has been pushing hard, and there’s little love lost between President Donald Trump and Jeff Bezos, CEO of Amazon. Bezos owns the Washington Post, which has been frequently critical of Trump, and the President has been vocal in his dislike of both the Post and Bezos.

Microsoft has not commented via a press release on the award as of yet, and the Defense Department seems guarded in its press release. While the JEDI contract has been held up as a “winner take all” deal, with the idea being that a single cloud provider would consolidate services within the Defense Department, the press release starts off touting a “multi-vendor” strategy:

Today the Department of Defense has taken another step forward in the implementation of our Cloud Strategy with the award of an enterprise general-purpose cloud contract to Microsoft. This continues our strategy of a multi-vendor, multi-cloud environment as the department’s needs are diverse and cannot be met by any single supplier. This contract will address critical and urgent unmet warfighter requirements for modern cloud infrastructure at all three classification levels delivered out to the tactical edge.

The release goes on to describe not a $10 billion deal, but a “base contract period” with only $1 million guaranteed, and worth up to $210 million, with a “rigorous review” of the contract after that:

The base contract period is two years with a $1 million guarantee. The department projects that user adoption will drive an estimated $210 million of spending during the two year base period. The DOD will rigorously review contract performance prior to the exercise of any options.

The Department continues to assess and pursue various cloud contracting opportunities to diversify the capabilities of the DoD Enterprise Cloud Environment. Additional contracting opportunities are anticipated.

An Amazon spokesperson said the company was “surprised about this conclusion,” and sounds like they’re not ready to give up quite yet, with multiple reports of possible legal action forthcoming. Here’s the Amazon spokesperson statement as reported by Business Insider:

“AWS is the clear leader in cloud computing, and a detailed assessment purely on the comparative offerings clearly lead to a different conclusion. We remain deeply committed to continuing to innovate for the new digital battlefield where security, efficiency, resiliency, and scalability of resources can be the difference between success and failure.”

While somewhat surprising, Microsoft has been working hard on satisfying the demands of government for security and compliance, and it appears as that hard work has paid off. We’ll continue to watch closely as details of the contract play out. For now, a big win for Microsoft and a big loss for Amazon.